The Ecuadorian state has lost nearly US$1bn since 1993 due to badly negotiated mobile concession contracts, local newspapers quoted the country's President Rafael Correa as saying.
The government awarded mobile concessions for 15 years in 1993 to Conecel and Otecel with the option to renew. Conecel is owned by Mexican giant América Móvil and operates under the Porta brand, while Otecel is owned by Spanish telecoms operator Telefónica and operates in the local market as Movistar.
Porta's and Movistar's contracts are due to expire at the end of 2008 and both operators began discussions for renewal of the contracts with the previous government. Correa was sworn in as president on January 15 this year.
"Next year we will renegotiate concessions with Conecel and Otecel and they will face a government that is not going to gift them the business of the century," Correa was quoted as saying.
"Correa is trying to come across as a hero to his people and better position himself for the upcoming negotiations," telecoms analyst Wally Swain of US-based consultancy Yankee Group, told BNamericas.
"I think the government will try to considerably increase the royalties from mobile operators. The government is threatening not to renew the licenses, which is like a gun at the negotiations table," Swain said.
However, Swain believes it is unlikely the government would go as far as not renewing the licenses and is just talking tough.
José Otero, president of consultancy Signals Telecom Consulting, agrees that is unlikely the government would not renew the licenses but points out there are several sticking points that need to be negotiated.
On one hand, the government wants mobile operators to cut calling rates and expand network coverage in the country. On the other, operators are asking for more spectrum, as they consider what they have is insufficient, Otero said.
Correa also said the government was going to have to review issues such as disproportionate taxation for different mobile operators. Porta's market share is more than twice the size of Movistar's and it pays less tax, Correa said.
By the end of March, Ecuador had 8.8mn mobile telephony subscribers. Porta had a market share of 67% followed by Movistar with 28.2%, according to official statistics."
Posted to the site on 30th May 2007
Posted to: www.cellular-news.com/story/24061.php